Orange Mulling Takeover Bid for Bouygues Telecom

Consolidation in the French mobile market looks closer than ever as Orange is reportedly mulling a bid for smaller rival, Bouygues Telecom.

Citing sources familiar with the matter, Reuters reported that Orange
has hired two investment banks to asses a takeover bid for the rival mobile
network operator.

No formal decision has been taken by Orange's board of directors yet, but it
was said to have been encouraged by preliminary discussions with regulators who
were minded to conditionally approve such a deal.

The French regulators are said to be keen to reduce the fierce price
competition in the market that has damaged it since the fourth mobile network,
Free was launched. That competition has lead to waves of redundancies in the
industry as the companies seek to cut costs -- and the French government, which
owns 27% of Orange is particularly sensitive to that issue.

As the European regulators are also likely to be involved, Orange is
understood to be waiting until decisions are passed on mergers in Spain and
Germany before making its decision.

If the EU is favourable, and with likely support from French regulators, then
Orange may make a bid.

Bouygues Telecom has been in play as a possible takeover target after it
failed in an bid to buy SFR from Vivendi. Although it could operate as a
stand-alone company, it's parent company is known to be looking at options to
sell or merge the division with another telecoms operator.

Any deal is likely to see Bouygues Telecom renew its offer to sell its
spectrum and network to Free, in exchange for the regulatory clearance, so that
Free, which currently uses the Orange network where it lacks infrastructure can
compete on an equal footing with the larger networks.

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